‘Catastrophic for a state like ours’: Alaska governments and nonprofits react to announcement of federal grant funding freeze

Alaska nonprofits and governments are scrambling to understand the fallout of a Trump administration order to freeze federal grant and loan funding, representing billions of dollars and a potential major blow to Alaska’s economy and services.

On Monday, the White House Office of Management and Budget issued a memo instructing federal agencies to stop the flow of all federal grant and loan money, saying a pause was needed until the administration can conduct reviews of spending to ensure it complies with the president’s policy goals, which include undoing policies on transgender rights, environmental reforms and diversity and inclusion initiatives.

Trump White House reverses course, rescinds freeze on federal grants

The freeze was set to go into effect at 1 p.m. on Tuesday in Alaska, though some nonprofits reported being locked out of the back-end computer systems that disburse some federal grant money before then. And by Tuesday afternoon, court battles over the order were already unfolding. A consortium of nonprofits sued, asking a judge to issue an injunction. On Tuesday afternoon, just minutes before the pause was set to take effect, a federal judge temporarily blocked the action, delaying it until Monday.

People in Alaska are worried, U.S. Sen. Lisa Murkowski, R-Alaska, told reporters in Washington earlier Tuesday.

“Our phones have been ringing off the hook all morning,” Murkowski said. Constituents have been calling “wondering what it means, how long it’s going to last — everything from a small hydro project down in the Angoon area to people concerned about everything from housing to water infrastructure projects. So lots of questions about what it means and the impact.”

In a written statement, U.S. Sen. Dan Sullivan, R-Alaska, said the freeze appeared to be “limited in scope” but that he had concerns about how it could “negatively impact Alaskans.”

“My team and I will continue to weigh in with the Trump administration on behalf of impacted Alaskans and our communities,” the statement said.

“Unlike many who have preceded him in the office, the President intends to deliver on his promises to ensure American tax dollars are reasonably deployed,” said U.S. Rep. Nick Begich III, R-Alaska, in a statement. “As we wrestle with a federal government that has grown to great excess, we have a responsibility to future generations of Alaskans to ensure we are not needlessly running up the balance on our nation’s credit card.”

“I heard it described this morning from someone as being a five-alarm fire,” said Sen. Bill Wielechowski, D-Anchorage. “This really has the potential to throw a wrench in the state, for at least the short term.”

[Federal judge temporarily blocks Trump administration freeze on federal grants and loans]

The executive order is causing “panic and confusion” among leaders in Alaska’s nonprofit sector, said Laurie Wolf, the president of the Foraker Group, the statewide nonprofit association.

While the scope and dollar amount of grants affected was far from clear Tuesday, federal grant money courses through almost every aspect of Alaska’s economy, Wolf said. A freeze, even temporary, “would be catastrophic for a state like ours,” said Wolf. “We rely so heavily on federal dollars.”

In 2023, about $32 billion in federal funding went to Alaska recipients, according to the Foraker Group, with the largest shares going to state and local governments and private companies. Nonprofits received about $579 million or 2%, according to the group’s latest annual report.

In Alaska, federal grants pay for everything from salaries of homelessness outreach workers to airport, harbor and port construction and improvements to operating shelters for domestic violence victims to preschool programs to tribal health care entities with huge reach, according to government and nonprofit leaders.

“Every channel of communication has been blowing up with people asking, ‘How will this affect me and the work I do in Alaska?’” Wolf said.

The nonprofit sector employs 35,302 people directly in Alaska — making it one of the largest industries in the state.

“Nothing will be untouched, and Alaskans will feel this deeply,” she said.

City governments, the state’s university system and nonprofit organizations said Tuesday that they were evaluating the potential impact of a freeze.

In an email, the University of Alaska described a “rapidly developing and evolving situation” that could impact the university and its academic and research programs, telling faculty and students to “continue work as planned unless you receive specific guidance or instructions from your federal agency sponsor.”

The state of Alaska did not directly answer questions about the specific impacts of federal grant money. Alaska is “awaiting further guidance from (the federal budget agency) and continuing to assess potential impacts,” said Jeff Turner, a spokesperson for Gov. Mike Dunleavy. The pause shouldn’t affect payments to individuals, Turner wrote.

States reported that the Medicaid funding portal used for federal payments was down, but the White House said it would be restored.

“No Department of Health programs are impacted,” Turner wrote in a statement. “All its services will continue as normal, including SNAP and Medicaid.”

On Tuesday morning, representatives from organizations that employ hundreds, such as the Alaska Native Tribal Health Consortium and Southeast Alaska Regional Health Consortium, were still assessing the potential immediate and longer-term impact.

“Clearly, this is a rapidly changing situation and many of the questions being asked will ultimately be answered by the courts,” said Shea Siegert, a spokesperson for the statewide tribal health organization.

“While our Tribal leaders fight to ensure the federal trust responsibilities for our Tribal nations are met, our sole focus is delivering the highest echelon of care to the people we serve,” Siegert said in a statement.

The Fairbanks-based Tanana Chiefs Conference advised its member tribes to immediately draw down available funds from federal payment systems and to review existing grants for contracts and obligations.

“We recommend taking action by 1:00 p.m. Alaska time today to ensure your Tribe’s interests are protected,” Tanana Chiefs Conference said in a statement to members.

The impacts for Alaska local governments are manifold, said Nils Andreassen, the head of the Alaska Municipal League.

Communities across Alaska maintain airports, build ports and harbors and repair infrastructure with federal grant dollars, Andreassen said. Such funding also pays for many local health and social service programs. Some communities have staff members paid through a federal funding source, he said. Cities are thinking about funding disruptions and how they could lead to delayed barge deliveries, and missed or shortened summer construction seasons.

Most of the federal grants are paid through reimbursement, and on Tuesday there were widespread worries about that money not coming in on time.

“People are asking, do we have until 1 p.m. to get that (reimbursement request) in? Do we lose a month of cash flow?” he said. “I think there’s real consequences.”

In at least some places in Alaska, the effects of the grant freeze were being felt immediately Tuesday.

As the day unfolded in chaos, one thing did seem certain: There would be more upheaval to come.

“It’s a change every 15 minutes,” Andreassen said.

For the Alaska Network on Domestic Violence and Sexual Assault, the potential fallout was coming into clearer focus Tuesday.

The organization helps fund a network of safety shelters for survivors of domestic violence and sexual assault across the state, with much of the funding coming from federal grants, said Brenda Stanfill, the executive director. If those cease, the shelters would be able to continue bare-bones operations for about three months, she said. The organization’s legal services program is entirely federally grant funded.

Stanfill said she’s faced with the worry that her organization’s work will be found to run afoul of the Trump administration’s promise to end funding of any program that contributes to diversity and equity initiatives.

“We are walking a very fine line. It’s very hard to talk about gender violence without talking about equity issues. Now that’s being called into question over whether we are allowed to talk about that,” she said. “It seems crazy that I’m saying ‘whether we are allowed to talk about it.’”

Daily News reporter Iris Samuels contributed reporting.

Clarification: This story has been updated to reflect that 35,302 people are directly employed by nonprofits in Alaska.